Drone manufacturers including AeroVironment and Kratos Defense jumped early Friday after the Department of Defense on Thursday announced a directive to "unleash U.S. military drone dominance."
The DoD on Thursday detailed changes to the ways the Pentagon procures and implements drones for U.S. military operations, in a memo and an accompanying video from Secretary of Defense Pete Hegseth.
The DOD is rescinding "restrictive policies that hindered production and limited access" to drone technologies, and "unleashing the combined potential of American manufacturing and warfighter ingenuity," Hegseth said.
Unleash The Drones
The order removed prior DOD policies from 2021 and 2022 that restricted the U.S. military from buying drones and components made by Chinese companies. It also assigns to combat units authority to buy, test and train with small UAS drones that comply with statutes, according to reports.
"While our adversaries have produced millions of cheap drones before us we were mired in bureaucratic red tape," Hegseth said in the video online. "Not anymore."
The memo aims to bolster U.S. drone manufacturing by "approving hundreds of American products" for military purchase. It also calls to leverage private capital that supports the industry. The DOD plans to arm combat units with a "variety of low-cost drones" made by American engineers and AI experts.
Here Are The Best Artificial Intelligence Stocks To Watch Now
The order will also expand the Blue List of DOD-approved unmanned drones, components and software, as part of a collaboration between the Defense Innovation Unit and the Defense Contract Management Agency, according to reports. The DOD in 2020 established an effort called Blue UAS, which is the process for certifying commercial drones for military use.
"Modern battlefield innovation demands a new procurement strategy that fuses manufacturers with our front line troops," the memo said.
Lastly, the DOD plans to integrate drones into relevant combat training starting next year, which includes force-on-force drone wars.
"Lethality will not be hindered by self-imposed restrictions, especially when it comes to harnessing technologies we invented but were slow to pursue," Hegseth wrote in the memo.
The announcement builds on a June 6 executive order from the White House to invest in drone technology and integrate it into the national airspace.
See The 5 Best Stocks To Buy And Watch Right Now
Drone Stocks
Kratos Defense, which makes unmanned aerial vehicles, among various defense systems, rallied almost 12% Friday. KTOS stock has soared 96% so far this year.
AeroVironment, manufacturer of the Switchblade 600 "Kamikaze" drone and recon drones, jumped about 11% Friday. AVAV shares are up about 71% this year, and near their record high of 295.90 from June 30.
L3Harris pared its early gains to record a slight decline on the day, with shares trading in a buy zone for a cup-with-handle base.
You can follow Harrison Miller for more stock news and updates on X/Twitter @IBD_Harrison
